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Utility Week 17th April 2015

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UTILITY WEEK | 17TH - 23RD APRIL 2015 | 29 Markets & Trading This week Summer's demand 'will be lowest ever' National Grid estimates solar capacity increases will see summer peak demand at 37.5GW The UK's peak grid power demand this summer is set to be the lowest yet, as consum- ers increase their reliance on embedded renewable sources, National Grid has said. The transmission system operator does not meter power produced from decentralised solar, which is connected directly to regional distribution networks, and has effec- tively removed around 900MW of demand from the grid over the past year. As a result, National Grid estimates that this summer will see peak demand of 37.5GW, because solar capa city increased by 2GW in 2014. The lowest predicted demand level is set to be around 18.6GW, in line with the lows predicted for last summer. "It is likely that embedded solar generation will lead to a permanent reduction in summer peak demands," its outlook report said. However, in a blog published alongside the report, National Grid's head of energy strategy and policy, Roi- sin Quinn, said that even though its control room would not be concerned with maintaining supply margins, as is the case in winter, the summer season "can be just as challenging". "It's just the nature of the challenge that changes," she said. "Although we don't have a World Cup or a Royal wedding this summer, another Andy Murray final at Wimbledon or a big soap storyline might mean we're put on standby to dispatch power to meet any pick-up in demand," Quinn said. JA GAS LNG imports triple to force UK energy prices lower The amount of gas imported by the UK via liquefied natural gas (LNG) shipments tripled over the first quarter of this year, causing wholesale electricity prices to slump to four-year lows. Market specialists at Icis said wholesale power prices have hit their lowest level since 2011, encouraged by a global glut in the amount of available gas supply, which has resulted in a return of strong LNG imports to the UK system. Since 2011, global LNG producers have favoured the price premium in the Asian gas markets. But as Asian prices fall due to low demand and plum- meting oil prices, the UK has fast become an increasingly attrac- tive destination for cargoes. "This means that, for the likes of Centrica and Eon, both of which have flexible supply contracts with Qatar, the UK could prove a more attractive LNG import option through 2015 and 2016, or at least a more viable market of last resort than has been the case in previous years," said Icis head of gas Ben Wetherall. The number of LNG cargoes coming in to the UK was three times higher over the past three months than seen in Q1 2014, which has caused wholesale gas prices in the UK to fall to 30 per cent below where they were last year. WATER Anglian keen to secure Grid contract Anglian Water is eager to secure a new demand-side balancing reserve (DSBR) contract with National Grid, the company told Utility Week. The water company was one of 12 businesses that signed a DSBR contract with National Grid to reduce energy demand during times of constraint dur- ing last winter's pilot, which provided a total of 330MW of spare capacity. The company will apply for a new contract for the winter of 2015/16, and a spokesperson from Anglian Water told Utility Week: "It's definitely something we want to be a part of." This comes despite the company not being called upon by National Grid to reduce its demand at peak times and rely on its 80 on-site generators. National Grid has so far pro- cured 242MW of DSBR contracts for the coming winter, and is set to sign more contracts through a second tender round for 1,000MW capacity through a mix of both the DSBR and supply balancing reserve (SBR) mechanisms. The tender for DSBR and SBR contracts with National Grid for next winter is open until 24 April. Bright future: solar capacity rose by 2GW in 2014 Tricks of the trade Jillian Ambrose "Remember that solar really is a fair weather friend" Much has been made over the past year of the energy sector's investment hiatus due to the perfect storm of an impending general election and the Com- petition and Markets Authority probe. But without too much fan- fare the UK has quietly increased its access to generation capacity by almost 1GW – due to the steady rise of solar alone. This is true in the summer anyway, because output from the embedded solar panels will "net off " the reliance on a trickier prospect, and getting trickier each year. While the sun shines, lower levels of power will be needed, leaving more of the UK's ageing fleet out of the money. But what about when it's dark and cold and those sorely needed thermal units have been mothballed or closed due to low profits? In a few years the capacity market should take care of that – and in the meantime at least we'll have those sunny summer memories. the central grid to push peak demand to its lowest ever levels this summer. There's something pleasingly "David and Goliath" about the idea that millions of tiny solar panels can come together to produce an effect equivalent to almost two conventional gener- ating units. But before we get too misty eyed, it's worth remember- ing that this cumulative effect really is a fair weather friend. Ironically, when the cold sets in and drives demand higher, these solar panels will effectively remove the capacity when we need it most. Renewables might be great news for decarbonisa- tion, but for the market they are

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